policymakers demonstrate

14 Blundell, Cantillon, Chizzolini, Ivaldi, Leininger et al.
economy as a component of the global ecosystem, and employs ‘methodological
pluralism’ to assess different aspects of what proponents view as a highly
complex, multifaceted human–economy–environment interaction. These two
opposing viewpoints produce different concepts of ‘sustainability’ and ‘sustainable
development’, and different ways of measuring whether progress
towards such states is being achieved. Environmental and resource economics
takes the position of ‘weak’ sustainability, which advocates that as long as
the total economic value of all capital stock (natural, human and man-made)
can be maintained in real terms, regardless of the distribution, sustainability is
achieved. The monetary valuation of natural capital and ecosystem services is
a central tool in such analysis.
Ecological economics instead takes the position of ‘strong’ sustainability,
which considers some natural capital to be ‘critical’ in that it makes a unique
contribution to welfare or has intrinsic value, and cannot be substituted by manufactured
or other forms of capital. The insights of institutional/evolutionary
economics, and behavioural economics, are also important to our conception
of the economy/environment relationship, and challenge the core tenets of neoclassical
economics (upon which environmental and resource economics is
based), including assumptions of rational, maximizing behaviour by all economic
agents (individuals and firms) according to exogenous preferences, the
absence of chronic information problems, the complexity and limits to cognitive
capacity, and a theoretical focus on movements towards or attained equilibrium
states of rest.
Although sometimes contradictory, these schools of thought are complementary
in many respects, and bring different insights to bear on both the issues of
sustainability (such as the ‘wicked problem’ of the ‘Energy Trilemma’; decarbonizing
the energy system whilst maintaining both energy security and energy
access and affordability) and policy approaches to tackle issues that threaten it.
Whilst the application of economic thought and methodological approaches
has advanced our understanding of interactions within and between the human
and natural world, many important areas of further theoretical, empirical and
methodological research remain. These areas may be broadly delineated into
four interrelated themes.
Basic characteristics of the economy–environment relationship. This concerns
the notions of weak and strong sustainability, central to which is valuation
of natural capital and ecosystem services. Particular areas of research should
show how to include or mitigate the impact of behavioural and cognitive complexities
on values elucidated, how nonmonetary valuation approaches may be
integrated or made complementary to monetary valuation, whether monetary
valuation, by framing the good or service in such terms, crowds out other forms
of valuation, and the extent to and nature in which monetary valuation can and
does impact decision- and policy-making (including the drivers and barriers